Shanghai (ZXZC)- Volkswagen Group is reinforcing its position in the Chinese automotive market and advancing its electrification strategy in China through collaborations between the Volkswagen brand and Chinese electric vehicle maker XPeng, and between Audi and SAIC Motor.

As part of the strategic collaboration, Volkswagen brand and XPeng have reached a technology framework agreement, the German auto giant announced on July 26. Initially focusing on the Chinese mid-size car market, they will jointly develop two electric models under the Volkswagen brand. These new vehicles, tailored specifically for the Chinese market and based on the MEB platform, are planned for market launch in 2026, pending the final agreement.

Photo credit: VW Group

As a vital part of this long-term strategic partnership, Volkswagen Group is to invest approximately US$700 million in XPeng, acquiring about 4.99% stake in the latter at $15 per ADS by way of a capital increase. Following the completion of the transaction, Volkswagen Group will hold an observer seat on XPeng's board. The issuance of shares is subject to customary closing conditions, including regulatory approvals.

Similarly, Audi and its Chinese joint venture partner, SAIC Motor, have also signed a strategic memorandum of understanding to further deepen their existing collaboration. They aim to rapidly and efficiently expand their portfolio of high-end, intelligent, and connected electric vehicles in the premium car market. As the first step, Audi plans to enter previously untapped niche markets in China by introducing new electric models.

The electric vehicles co-developed by Audi and SAIC Motor will boast cutting-edge software and hardware, providing Chinese customers with intuitive and interconnected digital experiences. All parties involved will contribute their core capabilities during the development process.

Furthermore, both agreements envision joint development of a new localized platform for next-generation intelligent connected vehicles (ICV). These partnerships seek to rapidly broaden the group's product offerings and create more "In China, For China" models, catering to the diverse needs of the vast and promising customer base and market segments in China. Details regarding the future electric vehicle platform collaboration will be further negotiated among all parties involved.

Ralf Brandstätter, Volkswagen AG Board Member for China, commented: "Local partnerships are an important building block in the Volkswagen Group's 'in China for China' strategy. We are now accelerating the expansion of our local electric portfolio and at the same time preparing for the next innovation step. With XPENG, we now have another strong partner that is one of the leading manufacturers in China in key technology areas.In a competitive and dynamic market environment, we are leveraging the strengths of Volkswagen and our partners to create synergies to bring additional products to market faster. In doing so, we focus on the specific needs of our customers in China. At the same time, we want to significantly optimize development and procurement costs.”

Volkswagen Group (China) Technology Company (“VCTC”), a technology company recently established, will serve as XPeng' development partner. VCTC will bring together R&D, innovation, and procurement functions, making it Volkswagen Group's largest R&D base outside of Wolfsburg. With over 2,000 experts in R&D and procurement arms, VCTC will be dedicated to the development of cutting-edge intelligent connected electric vehicle models.